Milliman Analysis: Public pension assets
rebound 7.34% in Q119, offsetting Q418 losses
Funded status improves by $185 billion in first quarter 2019
The first quarter of 2019 saw a welcome sharp rebound from the poor results of the
prior quarter, as the estimated funded status of the 100 largest US public pension
plans, as measured by the Milliman 100 Public Pension Funding Index (PPFI), jumped
from 67.2% at the end of December 2018 to 71.0% at the end of March 2019.
The deficit shrank to $1.508 trillion at the end of March 2019,
compared to $1.693 trillion at the end of December 2018. The
$185 billion increase in the funded status for Q1 was the largest
quarterly increase since the PPFI began in September 2016, right
on the heels of the largest quarterly decrease of $306 in Q4 2018.
In aggregate, the PPFI plans experienced investment returns
of 7.34% in the first quarter. Estimated returns for Q1 ranged
from a low of 3.52% to a high of 11.57%. The Milliman 100 PPFI
asset value increased from $3.471 trillion at the end of Q4
2018 to $3.697 trillion at the end of Q1 2019. The plans gained
investment market value of approximately $252 billion, which
was offset by approximately $26 billion flowing out, as benefits
paid out exceeded contributions coming in from employers and
Quarterly investment returns
The total pension liability (TPL) continues to grow, and stood at
an estimated $5.205 trillion at the end of Q1 2019, up from $5.164
trillion at the end of Q4 2018. Just as pension assets grow over
time with investment income and shrink over time as benefits
are paid, so too does the TPL grow over time with interest
and shrink as benefits are paid. The TPL also grows as active
members accrue pension benefits.
Quarterly funded status
Funded ratios moved higher this quarter, with 6 plans moving back above the 90% funded mark; 14 plans are now above this mark, compared to 8 at the end of the Q4 2018. At the lower end, the number of the more poorly funded pension plans also decreased. There are 28 plans whose funded ratios fall below 60%, and 9 plans remain below 40% funded.
Funded ratio at March 31, 2019
About the Milliman 100 Public Pension Funding Index
Since 2012, Milliman has conducted an annual study of
the 100 largest defined benefit plans sponsored by U.S.
governments. The Milliman 100 Public Pension Funding
Index projects the funded status for pension plans
included in our study, reflecting the impact of actual
market returns, utilizing the actual reported asset values,
liabilities, and asset allocations of the pension plans.
The results of the Milliman 100 Public Pension
Funding Index are based on the pension plan financial
reporting information disclosed in the plan sponsors’
Comprehensive Annual Financial Reports, which
reflect measurement dates ranging from June 30, 2016 to
December 31, 2017. This information was summarized as
part of the Milliman 2018 Public Pension Funding Study,
which was published on January 15, 2019.
This quarterly update reflects
adjustments made as of the
end of June 2018 as part
of Milliman’s annual Public
Pension Funding Study, just
recently published, found
here milliman.com/ppfs. The
adjustments reflect updated
publicly available asset and
liability information gathered
for the annual study.